Are we about to see a bounce in life expectancies ?

The UK could be approaching an inflection point in life expectancy trends, with implications for pension scheme funding and pricing in the pension risk transfer (PRT) market, according to LCP’s latest analysis.

Looking at emerging mortality data and insights from a recent survey of the PRT market, LCP’s new report finds recent experience points to a potential rebound in life expectancy assumptions following falls over the pandemic era.

Real chance that future updates push life expectancy higher again

The industry-standard CMI mortality projections model is used widely by trustees and sponsors. Emerging data over 2026 suggests that the next update to the model could result in further increases in life expectancy, potentially larger than in the previous two releases, depending on how the model is calibrated.

At the same time, LCP’s latest insurer survey indicates that life expectancy assumptions in the PRT market have stabilised after several years of decline, with little change between end 2024 and end 2025.

If assumptions begin to move upwards again, schemes could see increased liabilities and upward pressure on pricing, particularly for longevity swaps and, over time, buy ins.
The report identifies several factors that could influence future longevity:

• Anti-obesity drugs (GLP 1s): Early evidence suggests benefits beyond weight loss, with potential to meaningfully improve long-term health outcomes.
• Advances in cancer diagnostics: More accessible early detection (e.g. blood, urine and breath tests) could significantly improve survival rates.
• NHS funding pressures: An ageing population will require either increased funding or major efficiency gains to maintain care standards.
• Artificial intelligence: Promising developments in diagnostics and drug discovery, although the impact on longevity remains uncertain.

LCP is urging pension schemes to review their longevity assumptions now, regardless of their endgame strategy.

• Run-on strategies: Robust longevity assumptions are critical for assessing surplus and the extent to which it can be released.
• Insurance or consolidation: Schemes should check whether journey plans remain on track as views on longevity evolve.
• Risk transfer timing: If the market is at an inflection point, current conditions may represent an attractive window to hedge or transfer longevity risk.

Stuart McDonald, Partner and Head of Longevity and Demographic Insights at LCP, said: “After several years of falling life expectancies, the latest data suggests we could be at an inflection point. There is a real chance that future updates push life expectancy assumptions higher again.

“For pension scheme trustees and sponsors, that creates a clear need to stay close to the evidence and to understand how quickly pricing and funding positions could move.”

Ben Rees, Partner at LCP, added: “Trustees and sponsors have become used to CMI updates lowering life expectancy. The last two models break that pattern, for many schemes, adopting the core model out of the box could significantly increase liabilities.”

“The outlook remains uncertain, with questions over NHS recovery and the long-term impact of developments such as anti-obesity drugs.”